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Wednesday, July 29, 2009

Stimulus as one-night stand

A couple of readers have pointed us to this story, which (no disrespect meant toward said readers) is not news to anyone who's been paying attention. When the politicians are telling you how many thousands of jobs they're creating, you must keep in mind that many are short-term work assignments, not long-term employment positions. It's the same thing as when they tell you that a new streetcar is going to stimulate (or has stimulated) billions of dollars in investment somewhere. Namely, it's bunk. Fortunately, it's such obvious bunk that even the Associated Press catches on.

Comments (5)

Claiming to supplement the Stimulus by creating short-term, low-wage jobs while simultaneously passing a budget that eliminates thousands of long-term, living wage jobs is the height of hypocrisy.

Most states, including Oregon, have balanced-budget requirements, which means that a large portion of the federal government's counter-cyclical stimulus spending is offset by the states' pro-cyclical budget cuts.

"Sometimes some work for an individual is better than no work," said Oregon's Senate president, Peter Courtney.
How can anyone say such a thing? Everyone needs a real paying job that lasts more than a day or a week. What a total moron.
He needs to be looking for a job and see how it really feels.

I don't see the problem here. The article linked to seems largely ignorant of macroeconomics as well as failing to put this in context of supplementing federal stimulus.

Alarm bells went off for me when that article said the unemployment formula was
"so murky it can't be verified." Is there anything verifiable in macroeconomics? I think this article misses the boat on very basic grounds.

In addition, the article fails to recognize that short-term stimulus is the correct role. I think it's generally accepted that the federal stimulus will have no effect until about three years. In that context, supplementing with short-term stimulus from the states seems exactly the right reaction. In addition, Steve R. correctly points out that states can't do anything else.